How to do Unlimited Vacation Right
Unlimited PTO may be the second worst1 thing in the tech industry today that companies brag about. The main problem is that it’s an outright, obvious lie. Companies tell the obvious lie to avoid telling the truth. But there’s another problem: Unlimited PTO is really hard to do well.
Let’s address the various gigantic fauna in the room: Unlimited PTO was dreamed up as a scam. In states where accrued PTO must be paid out by law, it’s a way for companies to avoid paying you what you’ve earned.
What’s more, we know that people tend to take less vacation when they have an unlimited PTO plan. Whatever they might say out loud about vacation, be aware that your company’s leadership knows their unlimited policy will reduce PTO and they’re okay with that. Many of them are more than just okay with it.
So, what’s required for a company to minimize the harm caused by an unlimited PTO plan? Three things: effective leadership, clear guidelines, and trust.
The most important is also the least common in the tech world: effective leadership. You need solid managers and leaders up and down the organization, from line managers to your CEO. Any weak link here can wreak havoc. It’s extremely easy for a lazy or incompetent manager to fall back on “taking too much vacation” as a critique of an employee who isn’t living up to expectations.
But that’s the harder trick: your managers need to be able to define and measure expectations. In some departments (like sales), this might be easy. In others, (like engineering), this can be very difficult. But it’s absolutely vital: if you don’t know how much work is expected of an engineer in a year, you’ll have no idea if them taking four months2 of vacation is okay or not.
Your managers also need to be great communicators. If an engineer who is just barely keeping her head above water says she plans to take two months off, her manager needs to be able to warn her that two months off will likely push her level of production below what’s expected, and the manager needs to be able to do that in a way that focuses on the engineer’s output while she’s at work rather than focusing on the vacation (which you said was unlimited, right?).
This is straight-forward. Everyone should be playing by the same rules, and those rules should be written down and easy to follow.
Do you expect everyone to take at least a certain amount each year? Do you have a limit for how much consecutive time someone can take off? How much notice does someone need to give to take a week off? What about taking an afternoon off?
How does parental leave work? If you have a fixed amount of parental leave, does it disappear immediately if it’s not used? What if someone wants an extra two weeks as a part of their non-parental leave, but they want to take it at the end of their parental leave?
Every time you run into a situation that you don’t have a rule for, you need to publicize the rule and write it down. Nothing will poison the well faster than team members thinking different people are playing by different rules.
One last point: you might think it’s a good idea to give people guidelines as to how much vacation they can take. Unless it’s in the form of a required minimum, you’ve probably just concocted a policy structure that provides all of the negatives of fixed leave with none of the positives of unlimited PTO.
Let’s say, for example, that your guideline is that “most people” take three weeks off. Everyone is now on notice that they can’t take more than three weeks off. But they also know that some people in the organization will get to, and who gets to will largely be determined by who is buddies with their management chain. What’s more, they also know that some amount less than three weeks might be deemed “too much”.
Finally, there’s got to be a lot of trust. I don’t mean that the company needs to trust the employees, though. Because (in the U.S. at least) an employer can fire an employee for taking “too much” time off or otherwise gaming the system, no trust is required.
But your employees need to trust their leadership not to abuse them or the system.
What’s more, that trust can disappear in an instant. Here’s an example. Say you have a borderline incompetent manager who thinks one of his employees isn’t in the office enough. He decides to pull a report on how much vacation his team is taking, and discovers that, yes, that employee has taken more vacation than anyone else. He decides to go scold them about that.
Once word gets out that there actually is a limit, and you won’t know that you’ve crossed it until it’s too late, people will start viewing time-off with some apprehension. Satisfaction will go down, burnout will increase, and your talented people will leave for greener pastures with better vacation policies
Just remember: the ideal solution is to decide how much time people can take off per yer, and let everyone have that much vacation. You can obviously grant more on a case-by-case basis when needed, but providing common ground for employees will allow them to take time off worry-free.
If you currently have an Unlimited PTO system and you’re worried that you can’t navigate the change to a fixed PTO system without making a lot of people angry, it’s likely that your company lacks the leadership to run an unlimited PTO scheme effectively anyway.